Microsoft Corp. is developing a new videogame console for virtual-reality and 4K resolution gaming, the company said Monday at a media event in Los Angeles ahead of the gaming industry’s annual E3 conference. It also is planning a slimmer version of the Xbox One.

The new console, dubbed “Project Scorpio,” is expected for the 2017 holiday season and “will be the most powerful console ever built,” Phil Spencer, head of Xbox, said on…